Citing rising demand for solar arrays in the United States and Europe, SolarEdge Technologies Inc. boosted its production capacity for solar inverters and other components by 25% in the second quarter of 2019, achieving record-high shipment levels, CEO Guy Sella said on an Aug. 6 earnings call with investment analysts.
To fuel its continued growth, the Israel-based global supplier to solar, energy storage and electric vehicle industries is ramping up a new inverter factory in Vietnam. "We expect first first mass production shipments in the third quarter of this year," he said.
The manufacturing facility took on added significance in May after U.S. President Donald Trump abruptly raised import tariffs on roughly $200 billion of Chinese goods to 25% from 10%, which affected SolarEdge's China-made products. As a result, the company was forced to increase prices for its U.S. customers.
With U.S. sales surging to volumes "dramatically bigger" than anticipated at the end of 2018, according to Sella, SolarEdge is looking to the Vietnam factory to help blunt negative impacts of the Trump administration's trade policies.
"As we ramp the Vietnam facility, we will be able to service the U.S. market from it more and more, and avoid the tariffs to a growing extent," added Lior Handelsman, SolarEdge vice president of marketing and product strategy, in an email.
Sales to the United States accounted for 41% of SolarEdge's $306.7 million in solar product revenues in the second quarter, compared with 48% from Europe. Overall, the company increased second-quarter revenues by about 43% to $325 million, a level it expects to rise to between $395 million and $410 million in the third quarter of 2019.
Building on its 2018 acquisition of South Korean lithium-ion battery company Kokam Co. Ltd., SolarEdge plans to invest up to $60 million for a new battery manufacturing facility, Sella said. The factory would raise Kokam's current 200 MW of battery cell production capacity to between 1,000 MW and 1,800 MW over the next 18 to 24 months, the CEO said. The facility is being designed to accommodate expansion, he added.
SolarEdge plans to use Kokam's batteries in its residential and commercial energy storage installations, including coupled with solar, in the first half of 2020. Currently, it relies on third-party batteries for its energy storage projects.
The NASDAQ-listed company posted adjusted net earnings of 94 cents per share for the second quarter, up from 82 cents per share a year ago and beating the S&P Global Market Intelligence consensus estimate of 83 cents per share.